California has among the strongest labor laws in the United States. Employers in California must follow certain requirements such as paying employees the correct minimum wage, paying overtime, tracking hours and providing rest and meal breaks as mandated by the law. However, California unpaid wage laws also provide for exceptions to these requirements. An employee who is subject to such exceptions under wage, hour and overtime laws is known as an "exempt" employee.
Who is Exempt from Wage and Hour Laws in California?
There are three main requirements to help determine whether or not an employee in California is subject to a wage and hour exception:
White collar jobs: If an employee's primary duties are administrative, executive or professional in nature, they may be exempt.
Minimum salary: In order to be considered exempt, the employee must be paid a salary that is at least twice the state's minimum wage for full-time employment.
Independent judgment: The employee must have job duties that allow them to use their own discretion and independent judgment.
What Are the Employee's Duties?
Employees who have white-collar jobs typically fall under the "exempt" category. However, in order to determine whether an employee is white collar or exempt, it is important to look into the duties, which an employee performs, regardless of the job title or how his duties are described in the official job description. California law requires an employee to devote more than half of his or her working hours to the primary duty in order to satisfy the "white-collar test." Such employees who meet the requirements will be exempt from wage and hour laws in California including the right to receive a minimum wage, overtime compensation and 10-minute rest periods.
Types of Exempt Employees
There are several types or categories of employees who are exempt from California wage and hour laws:
A worker is considered an administrative employee if his or her primary duty is related directly to management or the company's business operations. Examples of such administrative duties include marketing, budgeting, finance, quality control, human resources, database administration, etc. Secretaries, clerks, bookkeepers and those who do not help run the business cannot be classified as administrative employees. An employee is considered to be administrative or executive when:
- Their primary duty is managing the business or a department
- They supervise or direct the work of two or more employees
- They have the authority to hire, fire or promote employees
- They receive little direct supervision
The following types of professional employees may be exempt from wage and hour laws in California:
- Licensed professionals, who have a state-issued license to practice professions such as law, medicine, architecture, engineering or accounting.
- Learned professionals, or those who have advanced knowledge in an area of learning, which is considered specialized.
- Creative professionals or those whose job focuses on invention, originality or talent in a recognized field.
Employees Who Receive Commissions
Employees in California who are paid on a commission basis are sometimes subject to an overtime exception in California. In order to be subject to this exception, commissioned employees must earn more than one-and-a-half times the minimum wage. Commission payments should comprise more than half of the employee's total compensation and they must work in the retail industry or some other professional or technical field.
Other Categories of Exempt Employees
- Physicians and surgeons who are paid at a minimum hourly rate of $97.99 and perform duties that requires them to be licensed. Medical interns and residents do not qualify.
- Computer professionals who are primarily engaged in creative or intellectual work and exercise independent judgment.
- Private school teachers who teach students K-12, earn at least twice the state's minimum wage and hold a baccalaureate degree or higher from an accredited institution of higher learning.
- Outside salespersons who are at least 18 years old, who spend more than half of their working time away from their employer's place of business.
- Some interstate truck drivers may be exempted from overtime laws, but not other rights such as meal breaks or minimum wage.
- Union employees who are employed under a collective bargaining agreement.
What to Do If You Have Been Misclassified as Exempt?
If you have been misclassified under an exception to wage and hour laws, you could resolve your dispute informally with your employer, file a wage and hour lawsuit in court or file a wage claim with the California Division of Labor Standards Enforcement or DLSE. Which route you choose to go will depend on your specific situation. Employees also have three years to make a wage claim under California law. The clock begins to tick at the time the wages first become due.
It is best to consult with an experienced Los Angeles wage and hour lawyer to find out which option might work for you. The experienced employment lawyers at Kingsley & Kingsley Lawyers will fight for your rights and help you secure fair compensation for your losses and hold employers accountable for unpaid wages.